Stickley Furniture operations: MRP and ERP systems

¶ … processing that is used in this scenario.

To first understand and assess which type of production processing is used in the business - job shop, batch, repetitive, continuous -- it is necessary to first understand the distinctions inherent in each of these categories.

Job shop -a variety of custom-made products is produced in batch numbers but relatively few in diversity. Most of the products made require an exact sequencing and set up of processing steps. Similar tasks and equipment are grouped together such as grinding presses in one are and drill machines in another. And general-purpose equipment is generally used rather than specially designed equipment.

In factory-like fashion, jobs pass through the various areas to be completed with some areas being skipped over for certain projects, whilst other areas may be used more than once.

Employees are generally highly skilled. The key duty is processing the tasks / project from station to station until it is completed.

Batch processing occurs when many similar items are produced at one time simultaneously such as cricket balls. The object in batches is developed stage by stage from station to station and many items are produced simultaneously.

Repetitive processing -- This is also known as mass production where large categories of standardized items are produced at one time in factory lines. Examples include food, chemicals, fluid, colorings and so forth to small parts (such as hooks) or to assembly of a product.

Continuous processing -- Here the products, being processed, are continuously in motivation with activities being done to them as they are moved down the line. Examples here include oil refining; pulp and paper processing; gas processing; metal smelting; fertilizers; glass; and synthetic fibers. The system of process control is used to monitor and supervise the process, techniques including regulating temperatures, machine speeds, tank levels, and flow rates (Khosrow -- Puor, 2006).

It seems to me that job shop processing is the primary mode of production at Stickley Furniture. This is because skilled workers are involved in the process. A variety of custom-made products are produced in batch numbers but relatively few in diversity. Most of the products made require an exact sequencing and set up of processing steps. Similar tasks and equipment are grouped together such as grinding presses in one area and drill machines in another. And general purpose equipment is generally (such as saws, sanders, and similar equipment) used rather than specially designed equipment (Schmenner, 1998).

In factory-like fashion, jobs pass through the various areas to be completed with some areas being skipped over for certain projects, whilst other areas may be used more than once. The process starts with large boards being cut into smaller sizes, with workers first examining these boards and marking them before passing them into the saw. A computer determines the optimal length and number of cuttings. Pieces are then glued with large presses holding various glued pieces together at one time. Sections are then sanded with some pieces requiring drilling, mortising, or carving -- particular machinery or workers seeing to this specific task. One of the last steps involves workers assembling the diverse pieces together with different components of the article of furniture stamped with location (e.g. desk drawer) and the date of production stamped on the piece. Records are kept of each piece made to facilitate repairs, if need be, and items are moved from one inventory to the finishing inventory where the culminating touches are applied to the piece of furniture before being shipped to stores or customer. The entire process of production and creativity accords with the job-shop description of tasks passing from station to station with some tasks skipping certain stations whilst others replicate stations and where articles are produced in carefully controlled batches of a limited exemplary product. Similarly, too, whilst job shops compete on aspects such as quality of outcome of product and economy of time spent in producing product, they do not compete over variables of price. This is the description of the Stickley furniture production.

Also a component of job shop processing, and also evidenced here, is the fact that employees are generally highly skilled craftsmen. The key duty is processing the tasks / project from station to station until it is completed.

To a lesser extent, the other kind of processing that is used may be Batch processing where many similar items are produced at one time simultaneously. The object in batches is developed stage by stage from station to station and many items are produced simultaneously. Similarly here, many types of chairs (for instance) are produced in batches with the pieces being cut, fed into the computer, sanded, glued together, specific tasks applied to them such as welding, carving etc., the date carved on them, the entire piece polished, then sent to the finishing department for the final touches before being shipped. Although Batch processing is a secondary description of the whole, it is also congruent in that the specific pieces that are produced in bulk are dispatched from station to station where certain different tasks are applied to producing them before they are sent onto the next for the succeeding procedure.

2. How does management keep track of job status and location during processing?

Each job has a bar code that identifies the job and the operation. With completion of the job, the bar code is removed and sent to the scheduling office where it is scanned into the computer then notifying that this part of the task has been completed. This helps production control keep apace of the production of each article as well as helping them know where they are in the process and where the article is located in the store.

3. The company has just received an order for 40 mission oak dining room sets. Briefly list the kinds of information the company will need to plan, schedule, and process the job.

The company will need the raw materials, purchased parts and other components of the assembled items. The company will also need to know when and how much to order of each material that goes into making the 40 dining room sets. The time into ordering and receiving the material as well as processing the material also needs to be worked out into planning periods so that the company will also need to know which suppliers it can rely on for providing them with the material and how long it would take until they actually do provide them with the required resources. This is necessary so that the ordering, fabrication, and assembly can be completed within a worked out, pre-allotted period of time. Timely completion also allows inventory records to be kept low.

The Material requirements planning (MRP) - which is what the process is called whereby the manager / team works out the kind of information the company will need to plan, schedule, and process the job - needs to know three questions in order for it to be effectively worked out. These are: (a) what is needed, i.e. The exact materials, resources, and sub-components that are needed to make these sets; (b) How much of these materials are needed? And (c) when is it needed? These are the questions that need to be answered for the dining room sets to be worked on and produced.

The master scheduler tells the manager / project director -- or in this case person overseeing completion of finished furniture - the time-phased goals of the processing of the dining room sets, and the inventory reports how much inventory is out there or on order for them to be able to do the job. The team needs to know all of this and have this in front of them as guidance for effective processing of the task. In this way, the team or planner can process the information in order to know during each phase the requirements for that particular phase and the amount and character of resources that he has at hand for completing the job.

The team therefore needs to know, too, the end date of the dining room set -- when they are needed and in what quantities. The master schedule informs them of that information. It tells them for instance that shipment of 10 sets delivered to store or individual q will start at the end of 1 week x, whilst shipment of another 10 set and to x customer or store will be activated by week y.

The bill of materials provides the team with the listing of the assemblies, subassemblies, parts and raw materials that is needed for completion of the dining room set as well as the quantity of each. Quantities and requirements are determined for each unit or component of the furniture. This is crucial information that they need to know for processing of their project.

Inventory records contain other information that the planner certainly needs to know such as gross requirements for the set, expected amount or resources that are available at hand for completing the project, and scheduled receipts. Other important information for each item is also available such as details of the suppliers, lead-time, and lot size policy. The inventory record also contains changes in order that may result from withdrawals, canceled orders, stock receipts, or similar events.

4. What benefits and what problems would you expect given the company's level production policy?

The company's policy of level output works in such a way that prior to peak demand periods, excess output is placed in the inventory to be used in case it is needed. This excess output is then used when the demand for supply exceeds the production capacity during the periods of peak production. To be more specific: Demand is highest in the first and third quarters. During the second and fourth quarters, therefore, excess output goes into inventory, and this excess output is then used during the first and their quarters.

This seems a sensible way of doing things so that there is always a source of supplies ready and handy when needed. The problem may be, however that the resources that are most needed are unavailable or that too many supplies for one specific aspect of the furniture are available and there is a paucity in some other area.

For this reason, generating of the material, and generating sufficient material should be planned before onset of the project and in accordance with demands of the project requirements. In fact, MRP II (manufacturing resources planning) would have been helpful here, where approximate outlay of resources through all seasons is determined ahead of time, as well as financing for resources in both amount and timeliness. The approximate amount of resources available as needed would be planned out at the outset of the project as well as knowledge of all the resources needed in varying degrees throughout the process. In short, in order for them to do their best, Stickley must have all their resources -- each and every components as well as subcomponents precisely when needed in both slack period and in peak demand periods. Putting aside excess goods prior to the peak demand period is wise, but these excess goods may not consider projects that will come up in the near future nor may they contain each and every part that may be needed; there may be too few of some, and too many of another component. Working out ahead of time, detailed capacity requirements so that the exact characteristics of the project will be met according to the specific capacity requirements also helps with short-range capacity requirements when for instance, certain chairs of the dining room set will have to be completed in short notice and one needs sufficient material in the inventory to complete certain elements. Lack of the materiel may necessitate revisions in scheduling which would be unfortunate since it would be intrusive to the schedule. It is important that stability in scheduling and in producing the articles at timely periods be achieved throughout. And for this reason, it is crucial that the necessary resources be available in the inventory as and when needed so that capacity is there to satisfy requirements.

Can you suggest any changes that might be beneficial to the company? What are they?

The company is considering a Total Quality management approach and this may indeed be helpful for it.

Since the late 1980s, firms have launched TQM programs in an effort to retain or maintain customer interest in face of the growing competitiveness around the globe. TQM attempts to continuously improve the quality of products and processes and investigates the factors that can achieve this. What TQM essentially states is that total product quality and satisfaction can and is achieved by everyone involved in the process. This includes management, workforce, suppliers, and even customers (Cua, McKone, & Schroeder, 2001). TQM bases its theory primarily on Fishbein and Azjen's (1975) assertion that attitudes and beliefs (including affect, evaluation, and social norms) drive intention, thereby, judgment, and act. Not only does the client have to experience pleasurable evaluation (feelings, beliefs) with the product or process, but the product or process has to be a fit (supplying usefulness) to the client or prospective client too. The company since to focus on quality and produce its work coherently and responsibly. However, there is room for improvement and TQM may help it.

To still greater effect, an ERP system may be helpful. ERP provides an integrated standardized record keeping system so that information sharing is permitted amongst all areas of the organization in order that the system can be managed more effectively. This may be particularly helpful for Stickley Furniture since their furniture system sounds a busy and complex place where various functions such as purchasing, distribution, production, sales, human resources, financing and accounting must all work together to achieve the objectives of the factory. Information sharing is a must so that all factions of the organizing knows what is occurring and that all flows speedily without mishap. This is also important given the complexities of detail that must flow between all workers and be known at all times such as the resources in the 'white' and finished goods inventory - particularly crucial in order to respond to customer orders precisely and in a timely manner and in order to smooth production.

An ERP system can also be useful in helping workers better check for quality -- specially since each worker is responsible for his or her workmanship, and can better put them in touch with distributors and therefore more readily and easily cheek material. It will help them outfit the inventory faster, order material more rapidly when depleted or when almost depleted and help them maintain contact with their various customers.

At the moment, the store keeps careful records of each piece of furniture so that details will be helpful when and if repair is needed. An ERP system can keep all of this in one place and add supplementary details as well as links to distributors and other applicable important information.